Insurance Giant Life Insurance Corporation of India (LIC) is all set to launch India’s largest-ever IPO on May 4, 2022.
The government will dilute 3.5 percent of its stake in LIC by IPO. The price band for the same has been fixed at Rs 902-949. At the upper price band of 949, the total issue is valued at Rs 21,000 crore. The reservation for retail investors is 35 percent for LIC employees and 0.71 percent for LIC policyholders, 10 percent, which is the first-of-a-kind move in any IPO in India.
Process of details you need to know before investing in an IPO.
An IPO is when an eligible unlisted company offers shares for the first time through a public issue of shares.
If you are investing in any of these reserved quotas - policyholders, employees or retail - you can invest a maximum of Rs 2 lakh (discount is netted off), e, 13 lots through your demat account. (A Demat account is a virtual locker for investors that can hold securities in virtual form.) Since LIC IPO has a quota of retail investors, policyholders and employees, if you bid in all three quotas, you can get an aggregate limit of Rs 6 lakh by investing through all three categories. However, if you bid for the retail category shares and policyholders’ quotas, you can get an aggregate limit of Rs 4 lakh. The discounts offered vary in all categories.
The discount offered is RS 45 for the Retail and Employees Category, whereas the discount provided in the policyholder Category is RS 60, higher than the other two categories. If you place the bid at the higher end of the price band at 949, retail and employees will get the allotment at 904, and the policyholder will get the allotment at 889. The discount is around 5 to 6.5 per cent in various categories. An investor will get this discount if he applies for a maximum of 13 lots in each category.
As per SEBI norms, the lot size should be in the price range of (10000 – 15000 per lot). In the case of LIC IPO, an investor can apply for a minimum single lot of 15 shares per lot. A small lot size of less than RS 15000 helps small investors participate in an IPO by applying for at least one lot.
Role of SEBI:
To develop Capital Markets for the growth of the economy.
To ensure broader participation and small investor awareness to participate in economic growth.
Corporate governance and protect small investors.
Yes, an investor can bid for more than Rs 2 lakh worth of shares in the non-institutional category quota (NII), but you cannot bid in the retail quota. Further, if an investor bids in the retail quota, he is not eligible to bid in the NII quota. However, if an investor bids in both the category, then both his bids will be rejected. No discount is offered in the NII quota. Generally, it is meant for HNI (High Networth Investor) who want to apply for more shares. A minimum of 15 per cent in the building Process IPO is reserved for the NII category. This all comes from the wisdom of the faculty and experts at the NIWSStock Market Institute in Jaipur.
A resident Indian National, Hindu Undivided Family (in the name of Karta or an eligible NRI who has resided in India for more than 182 days. The maximum bid a retail investor can apply is up to Rs 2 lakh i:e maximum of 13 lots at higher end of price band (lot size is in the range of 10000 – 15000 per lot)minus net of retail investors’ discount offered in an IPO.
An Investor can bid for an IPO through the ASBA facility with the help of a broker. The amount of the application is blocked in the investor's own bank account. If an investor receives an allotment, the funds are transferred to the company account, or if the application is rejected, the funds are released instantly.
IPO gives a very lucrative opportunity for small investors who want to learn to invest in capital markets. Generally, when market conditions are good, the majority of IPO with a rating of 5 lists at a premium on the listing date, given the fact that IPO allows investing in those companies which were not available for public investment, a company with good growth prospects and fundamentals will give good returns to an investor. However, if you want to advance your knowledge, grab an IPO, and make good money in the stock market, you need to join the share market classes in jaipur.
Disclaimer: This article is for educational purposes, and consult your financial advisor before investing in an IPO.
Start with a demonstration class.